HomeMy WebLinkAbout12/14/83 MINUTES RA MINUTES
BAKERSFIELD REDEVELOPMENT AGENCY
Regular Meeting-December 14, 1983
The Regular Meeting of the Bakersfield Redev:el~r~ w~-
called to order by Chairman Barton on Wednesday~ ~e ~i.' !, ~ ]5 3
at 5:00 p.m. in the City Hall Council Chambers. The Secretary called
the roll as follows:
ME[~BERS PRESENT:
James Barton
James Childs
Chris Christensen
Rollie Moore
Thomas Payne
Art Rockoff
MEMBERS ABSENT:
Donald Ratty
MINUTES
[linutes of the Regular Meeting of November 23, 1983 were approved
as presented.
SCHEDULED PUBLIC STATEMENTS
Hr. Gordon Gill, of Millard Archuleta, Eddy, Paynter Associates,
representing lioreland Development Co., was present and gave the
status on the progress being made on the Truxtun Ga!leria ?rojeck.
He seated tha'k in June discussions were held with the Counay regardSng
dhe development of the Galleria and ti~e possib41ity of the County
leasing space in the project. ~hese discussions continued until
~[ovember 22 at which time the County indicated they we?e willing ho
enAer into negotiations on an agreement with the Galleria for leasing
two floors with an option of first right of refusal on four addit4onal
floors on the first tower. Mr. Gill indicated the developer has
agreements or letters of intent to lease approximately 70 percent of
the first tower which is proposed for the corner of Truxtun and
Chester Avenues. The developer also has letters of intent for 50 per-
cent of the commercial area. There have been serious discussions with
a major tenant who would take over 42 percent of the second tower.
The County Board of Supervisors will have a report before them on
January 3, regarding the leasing of the two floors. Sometime in
January, the Beard will review a proposal with regard to the purchase
of the Hall of Records.
There are two major issues ~hat were to be acted upon w4thin the
present 90-day period. Those provisions concern the disposition of
the good faith deposit, relative to the evidence of financing, and an
agreement w4. th California Repuh]4c Bank with regard to the acquis]tion
of their property. Because of the inaction of the County, the
develo]~er has been unable to proceed in order to meet the deadl~.nes
outlined in the DDA.
Mr. Gill requested that the Agency give consideration to
exhending those deadlines. He explained that there is a problem
with the tax-exempt bonding proposed for financing a portion of the
project. The Federal Government had a bill proposed this year which
they did not take action on, however~ that bill has certain provisions
that im~le~enZ new rules and regulations w[~h re~ard to the use of
tax-exempt bonds until the Federal Government passes the bill.
Hr. Gill subraitted a letter to the Agency addressed to Terry
Mor:~land from Thomas Hard't, Assistant Vice Presfident of Bank of
America dated December 24, 1983 regarding the Galleria project in
which 'the developer is attempting to acquire financing for this
project. He explained the problems the developer has had with
meeting the deadlines. He stated that it is out of his hands~ and
requested extending izhe time elements with regard to the good faith
deposit and also with regard to Attachment 3, Section 9 of the
Schedule of Performance.
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Agency Member Christensen commen%ed that it seems that every-
thing is contingent upon the success of the second tower.
Mr. Gill responded that the financing institutions have put
certain requirements on the developer with regard to preleasing the
first tower. If he is able to prelease the required spaces in the
second tower, the whole Galleria project will be built at one time.
If they are unable to proceed because of the leasing of space, then
the second phase may be delayed. He stated that with the way the
negotiations are going with the major client for the second tower,
it is possible the Galleria will go as a single phase project.
Agency ~ember Christensen questioned if there wes any factual
evidence that Congress will adopt the bill.
Mr. Gill stated that their resources in Washington indicated to
them that some definite action will be taken, and that there is
tremendous pressure throughout the nation to 'take some type of action.
Agency Member Payne stated that he understood that the project
is contingent upon what the Agency does at this meeting, and is
subject to the purchase of the Hall of Records, and the bond financing,
and to a construction loan and take-out financing, which are subject
to certain percentage preleasing requirements. He stated that the
financial consultants indicated the City is in the best position. He
raised a question concerning the provision in the DDA to forfeit $25,000
in the event of a default. He also questioned if Dhase one is contingent
upon a percentage commitment on phase two.
Mr. Gill explained 'that ohase one will be built without any com-
mitment on the second phase. He also stated that 125 days would be
appropriate. His response to the $25,000 is that the developer had
no control over the legislation or the County's inability to make a
decision.
Mr. Kennon stated that, as a result of discussions with consul-
tants and staff to determine how long it would take Congress to make
a decision and to prepare a bond issue, it was staff's feeling that 125
days would be an appropriate length of time.
Agency Member Payne stated that he only wanted to allow the
number of days that staff can justify for the project. He questioned
if the letter from the Bank of America would make it a joint
venture with Bell Savings which would make it an entirely different
financing package.
~r. Gill clarified that Bell Savings is not involved in dis-
cussions at this time.
Agency ~iember Moore stated that public support for this project
has waned, and that proponents and supporters are having serious
thoughts about the project and that the Galleria is being perceived
by many as a City project. He stated that it upset some people that
the Coun~cy will become the primary tenant, and that the government
occupying space in the Galleria is not the answer to encourage the
private sector to come downtown. He questioned Mr. Gill if the de-
veloper is asking that the $25,000 be omitted.
l,ir. Gill responded that they were not asking that the $25,000
be omitted.
Agency Member Moore offered for consideration that maybe the
time to perform has come and that the Agency should proceed on with
the DDA as already jointly agreed.
hr. Kennon explained 'that the developer has a 90-day period
in which to complete his financing, and then he moves into the
second 90-day period and places a portion of his $oo~ faith deposit
at risk. If he moves into the third phase, he would forfeit $50,000,
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and by the 4th 90-day period, he would lose his entire deposit
if he were unable to perform.
Mr. Terry Moreland was present and explained that the Agency
shares the same concerns as the developer. He stated that he cannot
bring back a commitment letter until there is an indication of the
availability of the Hall of Records. The County will be making a
decision on the Hall of Records one week prior to starting the 90-day
period. He stated that if he goes to the lending institution and
presents the project and the limitations that the DDA outlines and
the restrictions, the bank would think the developer is at the mercy
of the Agency. He further stated that he cannot bargain on a commit-
ment letter that would satisfy the Agency because the Agency cannot
give the bank a commitment of how the bonds will be handled.
Agency Member Childs questioned if the bond issue would have
been passed, and if the bonds would have been sold, would that have
completed the 100 percent financing obligation.
Mr. Moreland responded that as far as the developer's part of
it is concerned, that is correct. He clarified that the $25,000
would not be applicable in this case because of the situation the
developer is in. He stated if the County would sell the Hall of
Records and the City went ahead with their bond financing, then the
90 days should be reasonable.
Agency Member Childs stated that the Agreement specifically
states Lhat if certain conditions were not met at a certain time,
the $25,000 would be ~mplemented.
Mr. Kennon stated that the DDA has two requirements, first the
developer has to submit his proof of financing for construction,
and an agreement between California Republic Bank and the developer
that will allow the developer to utilize certain spaces within the
project site that is owned by California Republic Bank for develop-
ment. There is nothing specifically within the DDA that delineates
the tasks that must be completed to receive the proof of financing,
however, the lender would not be interested in the project unless
the developer has some control of the site. All the Agency requiras
of the developer is to submit proof that he can finance the construc-
tion, and he has 90 days to do that. At the end of that 90-day
period, he can enter into another 90-day period, but if he doesn'i2
provide proof of financing within 120 days, he loses the $25,000.
Agency ~ember Rockoff questioned if the letters of intent for
approximately 70 percent of the first tower includes the two floors
of ihe Couniy's six floors, or nothing of the County.
Mr. Moreland responded that the figure includes two floors of
County.
Agency Member Christensen stated that the City shouldn't go
into building businesses for other County agency buildings, and 'that
the County has a much bigger tax base than the City. He said he was
reluctant to give an extension, and if he does, it will not be
contingent, it will be a term.
Agency ~iember Childs questioned what would happen if the County
did not sell the Hall of Records.
Mr. Kennon stated that the developer would have to redesign
the project or terminate it.
Agency Member Payne questioned if the Agency could allow a
90-day extension at the end of this 90-day period rather than the
120 days.
City Attorney Oberholzer explained that within the DDA there
would be a 90-day rollover, at the end of 90 days there would be
another 90 days in whJch Mr. Moreland can obtain his financing unless
the Agency would :~ake some kind of action to declare him in default
with regard ot that 90 days. However, with that rollover, Mr. Moreland
puts up $25,000 lia.~lity in the event he doesn't perform, buL if the
bonding legislation comes out such that we cannot issue bonds, hhen
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Mr. Moreland would not be jeopardized, and the $25,000 wouldn't go
because the City would be unable to perform.
Mr. Moreland stated that there will never be another extension
requested on the part of the developer. He stated they will either
terminate the project, or they will go forward and suffer the con-
sequences.
Agency Member Christensen stated that he would be willing to
extend for only one time. He questioned why, if this is such a good
development project, doesn't the investors and developers move in
on this project.
Mr. Kennon responded that as a result of the publicity on this
project, he has been approached by developers interested in doing this
kind of project. He stated that by having a successful project
of this 'type, the City will get the attention of the development
community.
Agency Member Payne made a motion to grant the 125-day extension
to the developer for the Truxtun Galleria project.
City Attorney Oberholzer questioned if the Agency wanted the
extension granted on the grounds that any future extensions would
have to be negotiated.
Agency Member Rockoff questioned if there was any kind of extension
sought~ does the Agency have an opportunity to accept it or go on
automatically as long ss the penalty is put out.
City Attorney Oberholzer stated that at the end of the first
90 days the Agency finds 'that it does not want the rollover it can
notice him that he is in default. The developer would have 30
days after the notice to cure the default at no jeopardy.
Agency Member Payne made a motion to begin the 125-day extension
on January 16, and at the end of that 125 days, the requirements of the
DDA resume at the date of 'this resumption and the "second 90-day
period" in which the developer's $25,000 is at risk shall begin.
If he cannot make the deadlines, then the Agency may notice him as
being in default. The motion was carried by the following roll
call vote:
AYES: Childs, Christensen, Moore, Payne, Rockoff, Barton
NOES: None
ABSENT: Ratty
NEW BUSINESS
(a) Adoption of the Xelocation Guidelines
Agency ]{ember Uayne made a motion to approve the Relocation
Guidelines for the Redevelopment Agency. The motion was carried
by the following roll call vote:
AYES: Childs, Christensen, Moore, Payne, i~ockoff, Barton
NOES: None
ABSENT: Ratty
[iD) Proposed Offer to Purchase Hall of Records
City Attorney Oberholzer stated that hhe second paragraph of
the Offer to Purchase will be changed to clarify to the County that
there are two contingencies.
Agency ~ember Moore made a motion to review and approve the Offer
to Purchase for the Hall of Records.
Agency f{ember Rockoff made a substitute motion to approve the
Offer to Purchase which was carried bythe following r~ll call vote:
AYES: Childs, Christensen, Moore, Payne, Rockoff: Bari_on
NOES: None
ABSENT: Ratty
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ADJOURNMENT
There being no further business to come before the Redevelopment
Agency, Agency Member Christensen made a motion to adjourn the
meehing at 6:50 p.m.
~. ~f~2~/~NBO~T~AM,~e/~re/~ary
Baker ~f~,/e'ld ReQeve,~/~/~ Agency
/~.'IES J.-~R~ON, Chairman
Bakersfield Redevcxopment Agency
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